There is a funny anecdote going around in Kerala that centres around a movie star’s hook-up with certain jewelry and money-lending firms, as the brand ambassador. It goes something like this: buy gold in the morning. pawn it with a money-lender in the evening. so, now that there is money in the wallet, ‘what’s the plan for the evening?’ – that’s the sign-off line taken from his commercial.
Like it or not, this anecdote does depict the typical malayalee’s inclination to live beyond his means, to project a lifestyle out of his reach.All sorts of scamsters make hay in Kerala while the malayalee chases his dream lifestyle, instant riches and social acceptability.The most recent were money-chain scams, running into hundreds of crores. Then there are Nagamanikyam scams – again, running into crores.Real estate scams, dime a dozen and on such large scale, it forced the state govt. to spin a new law to deal with them.
‘Gold Loans’ – which are actually pledge of gold for cash – is a business that Malayalee moneylenders have perfected and exported out of the state. Every financial institution, bank is into it now. Why, even India Infoline, a financial intermediary/brokerage from Mumbai, has got a gold loan book now.Kerala firms account for about 50% of all such loans business in India, who offer upto 90% of the gold value in loan. This is pure windfall for the consumer – if he sells the jewelry, he will not get anything anywhere close. To such an extent that some of them find it more ‘rewarding’ to default and forgo the gold stock!!
All this works fine as long as gold roars. If it tumbles, it could very well prick a bubble.Watch it, it won’t be that far away.
Posted on November 27, 2011
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